CFPB withdraws ICBA-opposed proposal on non-sufficient-funds fees

The Consumer Financial Protection Bureau withdrew its proposed rule to restrict the use of non-sufficient-funds fees, as advocated by ICBA.

Background: The proposed rule, introduced last January, would bar banks from charging fees, including NSF fees, for transactions that are declined in real time, deeming them unlawful under the Consumer Financial Protection Act. The proposal included declined debit card purchases, ATM withdrawals, and some peer-to-peer payments.

ICBA Advocacy: In a comment letter last year, ICBA called on the CFPB to withdraw the proposal. In the letter, ICBA said while most community banks do not charge NSF fees for instantly declined transactions, the proposal is an example of the CFPB improperly expanding its authority over unfair, deceptive, or abusive acts or practices.

More: In a previous news release after the bureau issued the proposal, ICBA said it would have a negative ripple effect on customers and businesses, undermining the CFPB’s mission.

'Junk Fee’ Campaign: The proposal was part of the Biden administration’s campaign against “junk fees.” ICBA has repeatedly pushed back against the campaign, noting the “junk fee” narrative mischaracterizes overdraft services and credit card late fees.